REVISITING JUDICIAL REVIEW OF
INTERPRETIVE RULES: A CALL TO PARALYZE
AUER DEFERENCE IN THE FACE OF PEREZ V.
MORTGAGE BANKERS ASSOCIATION
Kyle M. Asher*
I. INTRODUCTION.........................................................................................2
II. THE (NOT SO) FUNDAMENTALS OF ADMINISTRATIVE LAW .....................5
A. Legislative Rules under the APA ..................................................5
1. Formal Rulemaking ..................................................................6
B. Informal Rulemaking ....................................................................7
1. The Ossification of Informal Rulemaking ................................7
2. Causes of, and Reasons for, Ossification .................................9
3. The Problems Associated with Ossification ...........................10
C. Nonlegislative Rules under the APA...........................................11
1. Policy Statements ...................................................................11
2. Interpretive Rules ...................................................................13
III. PARALYZED VETERANS, PEREZ, AND THE FUTURE OF AGENCY
RULEMAKING ....................................................................................14
A. The Paralyzed Veterans Doctrine ...............................................14
B. Perez v. Mortgage Bankers Association .....................................15
C. “Regulation by Blog Post”: The Inevitable (and Likely
Immediate) Effects of Perez ........................................................17
D. Past Solutions to a Current Problem ...........................................21
IV. THE PROBLEMS WITH THE CURRENT DEFERENCE GIVEN TO
NONLEGISLATIVE RULES ..................................................................23
A. Standard of Review Given to Agency Interpretations of
Statutes .......................................................................................23
B. Standard of Review Given to Agency Interpretations of Their
Own Regulations ........................................................................25
V. SOLUTION ...............................................................................................27
A. Providing Auer Deference to Agencies Acting with the Force of
Law .............................................................................................28
B. Providing Skidmore Deference to Agencies Acting Without the
Force of Law ..............................................................................29
1. Thoroughness .........................................................................29
*
Law Clerk to the Honorable Robert Holmes Bell, United States District Court for the Western
District of Michigan. J.D., Michigan State University College of Law (2015); B.A., Michigan State
University (2012). The author thanks Professors Michael Sant’Ambrogio and Kevin Saunders for their
feedback on earlier drafts of this Article. The author also thanks Ryan Hulst for his valuable insights on
the topic.
2
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2. Validity of the Agency’s Reasoning .......................................30
3. Consistency.............................................................................31
4. Other Factors with the Power to Persuade..............................31
VI. CONCLUSION ..........................................................................................31
I. INTRODUCTION
The year 1946 was a busy one. Congress established the Atomic
Energy Act of 1946 leaving the country’s nuclear regulation in the hands of
the Atomic Energy Commission.1 John F. Kennedy’s political career took
off, as he was elected to the United States House of Representatives.2 On
New Year’s Eve, President Harry S. Truman officially declared an end to
World War II.3 Amongst all the excitement, the Administrative Procedure
Act (“APA”) was signed into law.4 Times have certainly changed since then,
yet in a recent decision, the Supreme Court reminded the lower federal courts
that they may not stray from the text of the 1946 statute.5
On March 9, 2015, the Supreme Court took steps to clarify an
increasingly confusing area of administrative law. In Perez v. Mortgage
Bankers Association, the Court overruled the D.C. Circuit’s “Paralyzed
Veterans” doctrine and held that agencies are not required to use notice-andcomment rulemaking when amending interpretive rules.6 Before the Court’s
decision, the Fifth Circuit had also adopted the Paralyzed Veterans doctrine,
while the First, Second, Fourth, Sixth, Seventh, and Ninth Circuits all rejected
it.7 Administrative law scholars nearly all agree that the Court’s decision in
Perez is the proper interpretation of the APA.8 While textually correct,
criticism has emerged that the decision “overturned the functional analysis
used in Paralyzed Veterans in favor of a highly formalistic analysis that seems
to essentially take the agency’s word for it when determining whether a rule
is interpretive or not.”9
See History, U.S.NRC, http://www.nrc.gov/about-nrc/history.html (last updated Nov. 4, 2015).
See World War II and a Future in Politics, JOHN F. KENNEDY PRESIDENTIAL LIBRARY & MUSEUM,
http://www.jfklibrary.org/JFK/Life-of-John-F-Kennedy.aspx?p=3 (last visited Mar. 7, 2016).
3
Proclamation No. 2714, 12 Fed. Reg. 1 (Jan. 1, 1947).
4
Administrative Procedure Act, Pub. L. No. 79-404, ch. 324, 60 Stat. 237 (1946) (codified as
amended at 5 U.S.C. §§ 551–59 (2012)).
5
See Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1212 (2015).
6
Id. at 1203. This doctrine derives from Paralyzed Veterans of Am. v. D.C. Arena, L.P., 117 F.3d
579 (D.C. Cir. 1997).
7
Mortg. Bankers Ass’n v. Harris, 720 F.3d 966, 969 n.3 (D.C. Cir. 2013).
8
See Brian Wolfman & Bradley Girard, Opinion Analysis: The Court Slays the D.C. Circuit’s
Paralyzed Veterans Doctrine, Leaving Bigger Issues for Another Day, SCOTUSBLOG (Mar. 10, 2015, 9:22
AM), http://www.scotusblog.com/2015/03/opinion-analysis-the-court-slays-the-d-c-circuits-paralyzed-ve
terans-doctrine-leaving-bigger-issues-for-another-day/.
9
Jonathan Keim, Perez v. Mortgage Bankers Ass’n: Formalism Trumps Originalism, NAT’L REV.
(Mar. 12, 2015, 12:57 PM), http://www.nationalreview.com/bench-memos/415306/perez-v-mortgage-ban
kers-association-formalism-trumps-originalism-jonathan-keim.
1
2
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The APA—while ambiguous as to the nuances between the two—
distinguishes between “legislative” and “nonlegislative” rules.10 In theory,
this distinction seems clear. In practice, however, commentators have used
every antonym of “clear” imaginable to describe it, including “‘tenuous,’
‘baffling,’ and ‘enshrouded in considerable smog.’”11 While some of the
brightest minds in administrative law have proposed credible solutions that
would help clarify the distinction, the courts have not yet adopted them.12
This distinction is crucial for three reasons: it technically determines
whether the rule is binding or nonbinding, it determines the procedural
requirements an agency must go through before issuing the rule, and, perhaps
most importantly, it determines what level of judicial deference the rule will
receive.13 Legislative rules have binding effect and are consequently subject
to more stringent procedural requirements than their nonlegislative
counterparts.14 Interpretive rules,15 which are a subset of nonlegislative rules,
are supposed to be nonbinding and therefore require practically no process
prior to enactment.16 The problem is that, in an attempt to avoid the
increasingly burdensome informal rulemaking process, agencies—under the
guise of nonlegislative rules—issue interpretive rules that are binding in
practice, and do so without following APA procedures.17
Today, agencies are left with a choice: when promulgating rules, they
can follow the ossified notice-and-comment process, which can take years,
and be comforted by the fact that after those years have passed, the rule will
be legally binding.18 Alternatively, with the press of a button, agencies can
post a “nonlegislative rule” to their websites that, for all intents and purposes,
has legislative effect.19 Currently, courts review agency interpretations of
their own regulations under the framework set forth in Auer v. Robbins
(referred to as “Auer deference”), which directs the courts to uphold the
agency’s interpretation unless it is “plainly erroneous or inconsistent with the
10
See Richard J. Pierce, Jr., Distinguishing Legislative Rules from Interpretive Rules, 52 ADMIN. L.
REV. 547, 547 (2000) (“When Congress enacted the Administrative Procedure Act (APA) in 1946, it
distinguished among agency rules of various types. The most important distinction is between legislative
rules and interpretive rules.”).
11
David L. Franklin, Legislative Rules, Nonlegislative Rules, and the Perils of the Short Cut, 120
YALE L.J. 276, 279 (2010).
12
Id. at 276 (“[A]dministrative law scholars have proposed a simple solution to the problem . . . and
courts have failed to take them up on it. . . . [R]ather than asking whether a challenged rule was designed
to be legally binding in order to determine whether it must undergo notice and comment [these
commentators urge], courts should simply turn the question inside-out and ask whether the rule has
undergone notice and comment in order to determine whether it can be made legally binding.”).
13
See discussion infra Part II.
14
Pierce, Jr., supra note 10, at 550 (describing the rulemaking process as “long and costly”).
15
Over the years, this subset of rules has been classified as both “interpretative” and “interpretive.”
For the sake of consistency, this Article will use “interpretive.”
16
Richard E. Levy & Sidney A. Shapiro, Administrative Procedure and the Decline of the Trial, 51
KAN. L. REV. 473, 493 (2003).
17
See discussion infra Sections II.B & III.C.
18
See discussion infra Section II.B.1.
19
See discussion infra Section III.C.
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regulation,” regardless of the amount of thought the agency put into the
interpretation.20
There are three potential solutions to this problem. The first
solution—for the Supreme Court to develop a clear-cut distinction between
legislative and nonlegislative rules—would alleviate the entire problem.21 As
this is also the most unlikely solution, and has been examined by numerous
scholars, this Article does not provide a new approach to the distinction. The
second solution—for Congress to amend the APA and impose additional
procedural requirements on agencies promulgating interpretive rules—is
similarly unlikely to occur and has also been discussed in prior scholarship,
but would be the most advantageous.22 This Article suggests that the most
effective amendment would require agencies to disclose in detail the logic
behind their interpretive rule prior to the rule’s issuance. Third, recognizing
that scholars and Supreme Court justices have become increasingly critical of
Auer deference, rather than eliminate Auer deference completely as some
have suggested, this Article urges courts to examine closely the amount of
time and energy spent by an agency in reaching its interpretation, by
integrating the framework set forth in United States v. Mead Corporation.23
Under this framework, if the agency acts “with the force of law” when
promulgating an interpretive rule, the rule will still receive Auer deference, as
courts can be assured that the agency has utilized its expertise.24 If the agency
does not act with the force of law, the agency’s rule will be reviewed under
Skidmore deference, and the agency will receive a varying degree of
deference depending on “the thoroughness evident in its consideration, the
validity of its reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power to persuade, if
lacking power to control.”25 Courts should give the greatest weight to the first
factor––the thoroughness evidence in its consideration. As a result, the more
thought the agency puts into the rule and the more the agency utilizes its
expertise, the more courts will defer to the agency’s decision.26
Part II of this Article lays the groundwork for the Perez decision and
provides a brief overview of legislative and nonlegislative rules. Part III
discusses the demise of the Paralyzed Veterans doctrine, the Perez decision,
20
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (quoting Bowles v. Seminole Rock &
Sand Co., 325 U.S. 410, 414 (1945)). See generally 519 U.S. 452 (1997).
21
See Pierce, Jr., supra note 10, at 548 (noting that the ability to distinguish between legislative and
nonlegislative rules would “reduce significantly the rampant confusion and inconsistency that characterize
this important area of law”).
22
See supra note 12 and accompanying text; see also discussion infra Section III.D.
23
See generally Michael P. Healy, The Past, Present and Future of Auer Deference: Mead, Form and
Function in Judicial Review of Agency Interpretations of Regulations, 62 KAN. L. REV. 633 (2014). See
Perez v. Mortg. Bankers Ass’n, 135. S. Ct. 1199, 1212 (2015) (Scalia, J., concurring); see also 533 U.S.
218, 229 (2001).
24
Mead, 533 U.S. at 229; see discussion infra Section V.A.
25
323 U.S. 134, 140 (1944).
26
See discussion infra Part V.
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and the effects that the Perez decision will have on the future of agency
rulemaking. Part IV reviews the differing standards of review courts use
when analyzing an agency’s interpretation of a statute compared to an
agency’s interpretation of its own regulation. Part V suggests that courts
review an agency’s interpretation of its own regulation under the same
framework as it reviews an agency’s interpretation of a statute.
II. THE (NOT SO) FUNDAMENTALS OF ADMINISTRATIVE LAW
Before getting into Perez, the Paralyzed Veterans doctrine, and the
implications that the Court’s ruling will have, it is important to attempt to
clarify a couple of confusing areas of administrative law. In order to
understand why the Court ruled as it did in Perez, we must first examines
legislative rules, nonlegislative rules, and the distinction between the two that
courts have struggled to clarify over the years. “The distinction between
legislative and nonlegislative rules is one of the most confusing [issues] in
administrative law.”27 The distinction has profound effects on agency
procedure, on judicial treatment of agency proclamations, and on those
impacted by the agency proclamation.28 Whether a rule is classified as
legislative or nonlegislative determines first if the agency must comply with
APA procedures when promulgating the rule.29 Once a rule is promulgated,
its classification also determines what level of deference the agency will
receive from the courts.30 The distinction has the additional effect of
determining whether the rule has binding legal effect on both the agency and
those affected by the proclamation.31 As a result of the procedural hurdles
and expenses associated with the rulemaking process, however, agencies are
frequently circumventing the process by issuing nonlegislative rules with
binding effect.32
A. Legislative Rules under the APA
The APA defines a “rule,” in part, as “an agency statement of general
or particular applicability and future effect designed to implement, interpret,
27
Jacob E. Gersen, Legislative Rules Revisited, 74 U. CHI. L. REV. 1705, 1705 (2007); see Franklin,
supra note 11, at 278 (“There is perhaps no more vexing conundrum in the field of administrative law than
the problem of defining a workable distinction between legislative and nonlegislative rules.”); see also
Kevin W. Saunders, Interpretative Rules with Legislative Effect: An Analysis and a Proposal for Public
Participation, 1986 DUKE L.J. 346, 348 (1986) (“While [legislative and interpretive rules] are generally
recognized, there is not general accord on how they should be defined.”).
28
Gersen, supra note 27, at 1705.
29
Id. (noting that the distinction is “critical for understanding . . . when agencies must use procedural
formality”).
30
Franklin, supra note 11, at 280 (arguing that after the Supreme Court’s decision in Mead,
“nonlegislative rules are presumptively disqualified from deferential judicial review under the Chevron
doctrine”).
31
Id. at 278 (noting that “legislative rules are designed to have binding legal effect on both the issuing
agency and the regulated public,” while “[n]onlegislative rules, by contrast, are not meant to have binding
legal effect”).
32
See Pierce, Jr., supra note 10, at 551.
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or prescribe law or policy or describing the organization, procedure, or
practice requirements of an agency . . . .”33 Legislative rules are those that
have binding effect on both the public and the agency issuing the rule.34 As
long as the rule does not conflict with a statutory provision guiding the
agency, these rules have the “force and effect of law.”35 Due to their binding
nature, legislative rules are subject to more stringent procedural requirements
than their nonlegislative counterparts.36 The APA distinguishes between
legislative rules that are subject to “formal rulemaking” 37 and those subject to
“informal rulemaking.”38
1. Formal Rulemaking
Given the time and resources required for an agency to engage in
formal rulemaking, agencies regularly go out of their way to avoid it, and
courts rarely interpret organic statutes to require the formal procedures.39 In
fact, in 2011, the American Bar Association’s Section of Administrative Law
and Regulatory Practice went so far as to call formal rulemaking “obsolete.”40
While rare, formal rulemaking may still be triggered in one of two ways. 41
First, formal rulemaking procedures must be followed when a statute
mandates that rules be made “on the record after opportunity for an agency
hearing . . . .”42 Because of the time and expenses associated with formal
rulemaking, courts have typically required Congress to explicitly use the APA
language “on the record” when ordering agencies to partake in formal
rulemaking.43 Second, regardless of whether the statute requires formal
5 U.S.C. § 551(4) (2012).
See KENNETH CULP DAVIS, ADMINISTRATIVE LAW TREATISE § 5.03, at 299 (1958).
Maryland Cas. Co. v. United States, 251 U.S. 342, 349 (1920)
36
Pierce, Jr., supra note 10, at 550 (describing the rulemaking process as “long and costly”).
37
5 U.S.C. §§ 556–57 (2012).
38
Id. § 553.
39
Levy & Shapiro, supra note 16, at 487.
40
Comments on H.R. 3010, The Regulatory Accountability Act of 2011, 2011 A.B.A. SEC. ADMIN. L.
& REG. PRAC. 20.
41
See infra notes 42–44 and accompanying text.
42
5 U.S.C. § 553(c) (2012) (emphasis added).
43
See United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 757 (1972). In AlleghenyLudlum, the Court examined the Esch Act, which authorized the Interstate Commerce Commission “after
hearing, on a complaint or upon its own initiative without complaint, [to] establish reasonable rules . . . .”
Id. at 757 (citing 49 U.S.C. § 1(14)(a)). The Court found that the language in the organic statute did not
trigger formal rulemaking, as formal rulemaking “need be applied ‘only where the agency statute, in
addition to providing a hearing, prescribes explicitly that it be on the record.’” Id. (citations omitted). The
Court affirmed this ruling in United States v. Florida East Coast Railway Company, when it stated:
In [Allegheny-Ludlum], we held that the language of . . . the Interstate Commerce
Act authorizing the Commission to act “after hearing” was not the equivalent of a
requirement that a rule be made “on the record after opportunity for an agency
hearing” . . . . Since [the statute at issue in this case] . . . does not by its terms add to
the hearing requirement contained in the earlier language, the same result should
obtain here . . . .
410 U.S. 224, 234–35 (1973).
33
34
35
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rulemaking, due process may still require formalized procedures.44
When one of the two formal rulemaking triggers are present, the
agency must comply with sections 556 and 557 of the APA.45 These sections
prohibit an agency from engaging in ex parte communications and require the
agency to hold pre-trial conferences, make proposed findings, and conduct
hearings that allow parties to, among other things, “provide testimony, present
evidence taken on a record, and cross-examine adverse witnesses.”46 Today,
a vast majority of commentators believe that formal rulemaking is outdated
and unworkable.47 Professor Aaron L. Nielson succinctly described the usual
complaints with formal rulemaking: “Formal rulemaking (1) does not produce
better policy; (2) creates delay; (3) reduces political oversight; (4) makes it
difficult to eliminate outdated rules; (5) perverts the regulatory process by
encouraging agencies to make policy through means other than rulemaking;
and (6) should be within the discretion of the agency.”48 Due to these
criticisms, and in an effort to expedite the drawn out formal rulemaking
process, agencies often opt for informal rulemaking when possible.49 Today,
however, even informal rulemaking can take years to complete.50
B. Informal Rulemaking
1. The Ossification of Informal Rulemaking
The heavy procedural requirements, the expenses, and the time
associated with the formal rulemaking process once led agencies to use
44
See Wong Yang Sun v. McGrath, 339 U.S. 33, 49–51 (1950), superseded by statute, Supplemental
Appropriation Act, 1951, 64 Stat. 1044, 1048 as recognized in Ardestani v. INS, 502 U.S. 129, 133 (1991).
In McGrath, the Court held that although the organic statute did not require formal proceedings, due
process requires a trial-type hearing before deportation. Id. at 50–51 (“When the Constitution requires a
hearing, it requires a fair one . . . . A deportation hearing involves issues basic to human liberty and
happiness . . . . It might be difficult to justify as measuring up to constitutional standards of impartiality a
hearing tribunal for deportation proceedings the like of which has been condemned by Congress as unfair
even where less vital matters of property rights are at stake.”); see also Craig N. Oren, Be Careful What
You Wish for: Amending the Administrative Procedure Act, 56 ADMIN. L. REV. 1141, 1151–52 (2004)
(noting that in certain instances, such as with ratemaking, courts have required formal rulemaking or similar
procedures even when Congress has not expressly mandated it).
45
5 U.S.C. § 553(c) (“When rules are required by statute to be made on the record after opportunity
for an agency hearing, sections 556 and 557 of this title apply instead of [section 553].”).
46
5 U.S.C. §§ 556–57 (2012); Steven Croley, Making Rules: An Introduction, 93 MICH. L. REV. 1511,
1514 (1995).
47
See Aaron L. Nielson, In Defense of Formal Rulemaking, 75 OHIO ST. L.J. 237, 257 (2014) (noting
that “administrative law scholars . . . generally oppose formal rulemaking”). In fact, in 2011, “a group of
forty-two professors wrote separately to the House Judiciary Committee to stress ‘the consensus of the
administrative law community that the APA formal rulemaking procedure is unworkable and obsolete.’”
Id. at 258 (quoting Letter of Forty-Two Admin. Law Professors to Lamar Smith, Chairman, Comm. on the
Judiciary, and John Conyers, Jr., Ranking Member, Comm. on the Judiciary (Oct. 24, 2011), http://democra
ts.judiciary.house.gov/sites/democrats.judiciary.house.gov/files/LawReg1111024.pdf).
48
Id. at 259.
49
See infra note 75 and accompanying text.
50
Franklin, supra note 11, at 284.
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informal rulemaking when possible.51 Through a plain reading of the APA,
informal rulemaking imposes only three requirements on an agency: the
agency must (1) publish a general notice of the proposed rule;52 (2) allow
interested parties the opportunity to comment on the proposed rule;53 and (3)
draft a concise statement describing the basis and purpose for the rule.54
Despite this seemingly clear language, all three branches of government have
contributed to an increasingly complex and formalized “informal”
rulemaking process, commonly referred to as the “ossification of
rulemaking.”55
The Judicial Branch has contributed to the ossification through its
interpretation of what the APA requirements mandate and its interpretation of
when the APA requirements apply.56 For instance, the requirement that
agencies allow interested parties to comment on the proposed rule has led to
the additional requirement that agencies respond to significant comments
made by the public.57 Similarly, the requirement that agencies draft a
“concise” statement of the basis and purpose of the rule has been interpreted
to mean that agencies “must disclose in detail the thinking that has animated
the form of a proposed rule and the data upon which that rule is based.”58
Further, as seen earlier, lower federal courts have expanded the situations
when notice-and-comment procedures are required.59
The Supreme Court has taken efforts to reign in the lower courts’
expansion of informal rulemaking. In Vermont Yankee Nuclear Power
Corporation v. Natural Resource Defense Council, the Court made clear that
the three, seemingly reasonable requirements set forth in the APA
“established the maximum procedural requirements which Congress was
willing to have the courts impose upon agencies in conducting rulemaking
51
Stuart Shapiro, Agency Oversight as “Whac-a-Mole”: The Challenge of Restricting Agency Use of
Nonlegislative Rules, 37 HARV. J.L. & PUB. POL’Y 523, 537 (2014) (noting that the “procedural
requirements on the formal rulemaking process led agencies to abandon it as a policymaking tool and led
them toward informal rulemaking”).
52
5 U.S.C. § 553(b) (2012) (stating the notice must include “a statement of the time, place, and nature
of public rule making proceedings,” “reference to the legal authority under which the rule is proposed,”
and “either the terms or substance of the proposed rule or a description of the subjects and issues
involved”).
53
Id. § 553(c) (“After notice required by this section, the agency shall give interested persons an
opportunity to participate in the rule making through submission of written data, views, or arguments with
or without opportunity for oral presentation.”).
54
Id.
55
Franklin, supra note 11, at 283 (“In recent decades, . . . Congress, the President, and the courts have
all taken steps that have made the notice-and-comment rulemaking process increasingly cumbersome and
unwieldy.”); Richard J. Pierce, Jr., Seven Ways to Deossify Agency Rulemaking, 47 ADMIN. L. REV. 59, 60
(1995).
56
See infra notes 57–58 and accompanying text.
57
Home Box Office, Inc. v. FCC, 567 F.2d 9, 35 (D.C. Cir. 1977) (“[T]he opportunity to comment is
meaningless unless the agency responds to significant points raised by the public.”).
58
Id. at 35–36.
59
See supra notes 5–7 and accompanying text.
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procedures.”60 The Court reasoned that if additional procedures were added,
“all the inherent advantages of informal rulemaking would be totally lost.”61
In March 2015, the Court made clear that Vermont Yankee is still binding
precedent, stating that “[t]ime and again, we have reiterated that the APA ‘sets
forth the full extent of judicial authority to review executive agency action for
procedural correctness.’”62
While the Supreme Court has taken steps to deossify the informal
rulemaking process, the other two branches of government have not.63 In
certain instances, the Legislative Branch requires agencies to submit timeand-resource-intensive cost-benefit analyses.64 The Executive Branch is also
not blameless for the ossification of informal rulemaking.65 Dating as far back
as the Reagan administration, the Executive Branch has engaged in lengthy
reviews of what it deems “significant” rules.66 President Clinton, through
Executive Order 12,886, implemented increased oversight measures, and
President George W. Bush further increased oversight when he directed
agencies to receive approval from a “Regulatory Policy Officer” before
beginning rulemaking proceedings.67
2. Causes of, and Reasons for, Ossification
Given the relatively straightforward text of the APA, one may begin
to wonder why, exactly, has the ossification of informal rulemaking occurred?
Professor Thomas O. McGarity argues that there are four primary causes of
ossification: (1) given informal rulemaking’s initial success, agencies began
to use informal rulemaking for increasingly complex and controversial issues,
causing a resistance from opposing trade associations and regulators; (2) both
the Executive and Legislative Branches are fighting over rulemaking power;
(3) for complex scientific and economic issues, agencies often need to seek
input from outside experts; and (4) the public at large distrusts the Executive
Branch and Executive agencies and wants to limit agency discretion.68
60
435 U.S. 519, 524 (1978) (noting that “[a]gencies are free to grant additional procedural rights in
the exercise of their discretion, but reviewing courts are generally not free to impose them if the agencies
have not chosen to grant them”).
61
Id. at 546–47.
62
See Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1207 (2015) (quoting FCC v. Fox Television
Stations, Inc., 556 U.S. 502, 513 (2009)).
63
See Matthew P. Downer, Note, Tentative Interpretations: The Abracadabra of Administrative
Rulemaking and the End of Alaska Hunters, 67 VAND. L. REV. 875, 882 (2014) (noting that “Vermont
Yankee only spoke to lower courts; it did nothing to prevent the other two branches from imposing
additional procedural requirements”).
64
Lars Noah, Doubts About Direct Final Rulemaking, 51 ADMIN. L. REV. 401, 404 (1999).
65
See infra notes 66–67 and accompanying text.
66
See Peter M. Shane, Political Accountability in a System of Checks and Balances: The Case of
Presidential Review of Rulemaking, 48 ARK. L. REV. 161, 186 (1994).
67
See Jason Webb Yackee & Susan Webb Yackee, Testing the Ossification Thesis: An Empirical
Examination of Federal Regulatory Volume and Speed, 1950-1990, 80 GEO. WASH. L. REV. 1414, 1429
(2012).
68
Thomas O. McGarity, Some Thoughts on “Deossifying” the Rulemaking Process, 41 DUKE L.J.
1385, 1397–98 (1992).
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Further, in certain instances, ossification may in fact be advantageous,
“provid[ing] important regulatory benefits, such as increased bureaucratic
accountability and regulatory rationality.”69 Even those scholars opposing the
ossification of informal rulemaking acknowledge that a more intensive
process leads to “fairness, allocative efficiency, and factual accuracy . . . .”70
3. The Problems Associated with Ossification
While the ossification process appears to have resulted from rational
concerns and may provide certain benefits, the problems associated with it
have been well-documented by legal scholars.71 There are two main concerns
with the ossification of the informal rulemaking process.72 The first concern
is that agencies will be less likely to issue important regulations at all out of
fear that they cannot comply with the more stringent requirements.73 Second,
there is a concern that the ossification of the rulemaking process often leads
to lesser procedural requirements, defeating its entire purpose.74 Agencies
will justifiably engage in informal rulemaking less frequently when it takes
longer and requires more agency resources.75 As a result, the desire to impose
more formality in the informal rulemaking process has led to the increased
use of nonlegislative rules, which impose less stringent requirements on
agencies.76
When agencies do in fact engage in informal rulemaking, ossification
presents additional problems.77 The biggest problem is that ossification
defeats the initial purpose of informal rulemaking by decreasing
administrative efficiency.78 Given the time and expenses the informal
rulemaking process demands, once an agency has promulgated a rule, it will
be reluctant to go back and revise it.79 Because a revision to an existing rule
is less likely, agencies will be hesitant to experiment with or test new rules,
knowing that the rule may stand for decades.80 All of these problems have
Webb Yackee & Webb Yackee, supra note 67, at 1419–20.
McGarity, supra note 68, at 1391–92.
71
See Pierce, Jr., supra note 55, at 60 (noting that the Environmental Protection Agency once
“claim[ed] that informal rulemaking procedures take approximately five years to complete”).
72
See infra notes 73–74 and accompanying text.
73
Mark Seidenfeld, Demystifying Deossification: Rethinking Recent Proposals to Modify Judicial
Review of Notice and Comment Rulemaking, 75 TEX. L. REV. 483, 486–87 (1997).
74
See id.
75
Noah, supra note 64, at 405 (noting that due to the ossification of informal rulemaking, many
agencies “prefer to avoid the hassles of such a process whenever possible. As a result, federal regulators
often choose to utilize even more informal and less participatory vehicles for implementing their enabling
statutes and formulating enforcement policies”).
76
See Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1204 (2015) (“The absence of a notice-andcomment obligation makes the process of issuing interpretive rules comparatively easier for agencies than
issuing legislative rules.”).
77
See infra notes 78–81 and accompanying text.
78
See McGarity, supra note 68, at 1391 (“[T]he ossification of the informal rulemaking process
deprives it of one of its greatest virtues -- administrative efficiency.”).
79
See id. at 1390–91.
80
Id. at 1392.
69
70
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11
led to the increased use of nonlegislative rules—including policy statements
and interpretive rules—in place of legislative rules.81
C. Nonlegislative Rules under the APA
Just as strict procedural requirements once led to a shift from formal
rulemaking to informal rulemaking, the ossification of informal rulemaking
has led to a shift from informal rulemaking to nonlegislative rules.82 To
oversimplify things, a nonlegislative rule—sometimes referred to as a “nonrule rule”—is a rule that is designed to provide guidance to both agencies and
members of the public affected by agency regulations.83 While legislative
rules derive their authority from congressional delegations, nonlegislative
rules receive no such delegation.84 As such, nonlegislative rules are not
technically binding on the agency or the public.85
Because the rules are technically not binding, less process is
required.86 Under the APA, the only requirement imposed on agencies
promulgating nonlegislative rules is that the agency must publish “statements
of general policy or interpretations of general applicability formulated and
adopted by the agency . . . .” as well as any amendments to the statement, in
the Federal Register.87 The APA explicitly exempts the two most common
types of nonlegislative rules—interpretive rules and general statements of
policy (“policy statements”)—from the notice-and-comment process.88
1. Policy Statements
An agency’s policy statements are one type of nonlegislative rule that
is exempted from the notice-and-comment process.89 A policy statement
“tentatively indicate[s] how agency decisionmakers will exercise a
discretionary power.”90 For example, a policy statement might discuss how
an agency should prioritize its time and money when resources are limited.91
Policy statements can guide agency members on what data is relevant when
making decisions, when to grant a license, and more.92 Still, these policy
statements must not be binding on agency members when making decisions.
Levy & Shapiro, supra note 16, at 484.
See id.
83
Michael Asimow, Nonlegislative Rulemaking and Regulatory Reform, 1985 DUKE L.J. 381, 383
(1985).
84
Id. at 381 n.3 (“A ‘nonlegislative rule’ is one adopted by an agency but not pursuant to delegation
of legislative power.”).
85
See John F. Manning, Nonlegislative Rules, 72 GEO. WASH. L. REV. 893, 893–94 (2004).
86
See infra note 87 and accompanying text.
87
5 U.S.C. § 552(a)(1)(D)–(E) (2012).
88
Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1200–01 (2015); see also 5 U.S.C. § 553(b)(3)(A)
(2012).
89
Perez, 135 S. Ct. at 1201.
90
Asimow, supra note 83, at 386–87.
91
Id. at 386.
92
Id.
81
82
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These principles were illustrated in Professionals and Patients for
Customized Care v. Shalala.93 In Shalala, the Food and Drug Administration
(“FDA”) issued a self-described “Policy,” without going through notice-andcomment procedures, setting forth “nine factors that the FDA ‘will consider’”
when deciding whether to bring an enforcement action against pharmacies
who improperly compound drugs.94 The Policy provided that the “list of
factors is not intended to be exhaustive and other factors may be appropriate
for consideration in a particular case.”95 Petitioners argued that the Policy
was in effect a binding, legislative rule and the FDA was therefore required
to go through the notice-and-comment process.96 The FDA argued that the
Policy was simply a policy statement, and was thus exempt from APA
requirements.97
To determine whether the Policy was a legislative rule or a general
statement of policy, the Fifth Circuit began by giving deference to the FDA’s
characterization.98 The FDA’s own characterization—a “Policy”—weighed
in favor of finding that it was not a legislative rule.99 Acknowledging that
“the label that the particular agency puts upon its given exercise of
administrative power is not . . . conclusive,” however, the court then next
looked to whether the Policy was binding.100 The court stated that when
determining whether an agency proclamation is binding:
The key inquiry . . . is the extent to which the challenged
policy leaves the agency free to exercise its discretion to
follow or not to follow that general policy in an individual
case, or on the other hand, whether the policy so fills out the
statutory scheme that upon application one need only
determine whether a given case is within the rule’s criteria.
As long as the agency remains free to consider the individual
facts in the various cases that arise, then the agency action in
question has not established a binding norm.101
After looking at both the FDA’s implementation as well as the plain language
of the regulation, the court found that the Policy was, in fact, a policy
statement rather than a binding, legislative rule.102
56 F.3d 592, 593–94 (5th Cir. 1995).
Id. at 593–94.
95
Id. at 594.
96
Id.
97
Id.
98
Id. at 596.
99
Id.
100
Id. (citing Brown Express, Inc. v. United States, 607 F.2d 695, 700 (5th Cir. 1979)).
101
Id. at 596–97 (quoting Ryder Truck Lines, Inc. v. United States, 716 F.2d 1369, 1377 (11th Cir.
1983)).
102
Id. at 600.
93
94
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2. Interpretive Rules
A year after the APA was implemented, the United States Attorney
General’s Manual explained that interpretive rules are rules or statements
issued by an agency to advise the public of the agency’s construction of the
statutes and rules which it administers.103 The Perez Court stated that “the
critical feature of interpretive rules is that they are ‘issued by an agency to
advise the public of the agency’s construction of the statutes and rules which
it administers.’”104 When drafting legislation, it is impossible for Congress to
think of every way in which the statute will be used. Because statutes are
often “obscure, ambiguous, or abstract,” it is left to the agencies to “fill the
gaps” and clarify the statute.105 If Congress has expressly delegated authority
to the agency, the agency may draft a legislative rule that cements its
interpretation as law.106 Often, however, no express delegation exists, and
agencies instead issue “nonlegislative interpretive rule[s] of general
applicability.”107
Interpretive rules, when used properly, provide great benefits.108
While not legally binding, these rules give agency employees needed
guidance and inform the public of the agency head’s interpretation.109 Often,
an agency may not have enough information on a particular subject to create
a binding rule, but interpretive rules provide the agency with a “relatively
low-cost and flexible way . . . to articulate their positions, at least in tentative
terms.”110 Moreover, commentators have noted that without the option to
issue interpretive rules, in lieu of using more formalized procedures, agencies
may be more inclined to not issue rules at all, leaving the public guessing as
to how the agency would interpret a particular statute.111
These benefits are often outweighed by the costs associated with the
improper use of interpretive rules.112 For instance, “agencies often
inappropriately issue [interpretive rules] with the intent or effect of imposing
a practical binding norm upon the regulated or benefited public.”113 Given
the ossification of informal rulemaking, agencies frequently use interpretive
rules as a way to “circumvent the notice-and-comment process.”114 Professor
103
ATTORNEY GENERAL’S MANUAL ON THE ADMIN. PROCEDURE ACT 22 (Wm. W. Gaunt & Sons, Inc.
1973) (1947).
104
Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1204 (2015) (quoting Shalala v. Guernsey Mem’l
Hosp., 514 U.S. 87, 99 (1995)).
105
Asimow, supra note 83, at 385.
106
Id.
107
Id.
108
See infra notes 109–11 and accompanying text.
109
See infra notes 110–11 and accompanying text; see also Manning, supra note 85, at 914.
110
Manning, supra note 85, at 914.
111
See Saunders, supra note 27, at 368–70.
112
See infra notes 113–15 and accompanying text.
113
Robert A. Anthony, Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like -Should Federal Agencies Use Them to Bind the Public?, 41 DUKE L.J. 1311, 1315 (1992).
114
Manning, supra note 85, at 915.
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Michael Asimow posits that there is no difference in the practical effect of a
legislative and nonlegislative rule on members of the public because “[m]ost
members of the public assume that all agency rules are valid, correct, and
unalterable.”115
III. PARALYZED VETERANS, PEREZ, AND THE FUTURE OF AGENCY
RULEMAKING
Out of concern that agencies were issuing interpretive rules simply to
“circumvent the notice-and-comment process,” prior to the Supreme Court’s
recent opinion in Perez v. Mortgage Bankers Association, the D.C. Circuit
was enforcing nonlegislative rule implementation in a more practical, albeit
textually questionable, manner.116 Under the Paralyzed Veterans doctrine,
the D.C. Circuit acknowledged the legislative effect that interpretive rules
may have and held that agencies must use notice-and-comment procedures
prior to amending interpretive rules.117 After Perez, however, lower courts
were reminded to strictly construe the APA and exempt all interpretive rules,
and substantial amendments thereto, from the notice-and-comment process.118
While Perez is a correct reading of the APA, it will have immediate effects
on agency rulemaking that the Court may not have intended.119
A. The Paralyzed Veterans Doctrine
Before 1997, there was a universal understanding that agencies could
amend interpretive rules without having to follow notice-and-comment
procedures.120 In Paralyzed Veterans of America v. D.C. Arena, L.P.,
however, the D.C. Circuit began the unraveling of this understanding.121 In
Paralyzed Veterans, the Paralyzed Veterans Association brought suit under
the Americans with Disabilities Act (“ADA”), which provided that new
athletic arenas must be “readily accessible to and usable by individuals with
disabilities . . . .”122 Originally, the Architectural and Transportation Barriers
Compliance Board interpreted this statute and recommended that wheelchair
seating be provided with “lines of sight comparable to those [available to the
rest] of the . . . public.”123 In 1991, the Department of Justice (“DOJ”) issued
a guidance document that did not discuss whether “lines of sight comparable”
to the public meant that wheelchair seating must be provided with sufficient
Asimow, supra note 83, at 384.
Manning, supra note 85, at 915; see also 135 S. Ct. 1199, 1206 (2015) (“The Paralyzed Veterans
doctrine is contrary to the clear text of APA’s rulemaking provisions . . . .”).
117
117 F.3d 579, 586 (D.C. Cir. 1997).
118
135 S. Ct. at 1206.
119
See infra notes 248–49 and accompanying text.
120
See Pierce, Jr., supra note 10, at 561 (“Before Paralyzed Veterans, agencies routinely changed their
interpretations of legislative rules through issuance of interpretative rules.”).
121
See generally 117 F.3d 579.
122
42 U.S.C. § 12183(a)(1) (1994).
123
Paralyzed Veterans, 117 F.3d at 581 (quoting 28 C.F.R. pt. 36 app. A. (1996)).
115
116
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sightlines over standing spectators.124 In 1994, however, without using
notice-and-comment procedures, the DOJ issued a statement providing that
“wheelchair locations must provide lines of sight[ing] over spectators who
stand.”125
Athletic arena owners argued that the original DOJ guidance
document “did not require . . . wheelchair seating [to have] sightlines over
standing spectators.”126
The D.C. Circuit upheld the DOJ’s 1994
interpretation after finding that it was not inconsistent with the prior
interpretation.127 In dicta, however, the court implied that the result may have
been different had the DOJ’s subsequent interpretation differed from the
original interpretive rule.128 So was born the Paralyzed Veterans doctrine,
which holds that an agency “must use the APA’s notice-and-comment
procedures when it wishes to issue a new interpretation of a regulation that
deviates significantly from a previously adopted interpretation.”129
From 1997 to 2013, the D.C. Circuit continued to use the Paralyzed
Veterans doctrine, most notably in the 1999 case of Alaska Professional
Hunters Association, Inc. v. Federal Aviation Administration.130 In 1998,
without following notice-and-comment proceedings, the Federal Aviation
Administration (“FAA”) published a notice requiring Alaskan hunting and
fishing guides who pilot light aircrafts to follow the same FAA regulations
that commercial aircrafts must follow.131 This was a change in stance from a
1963 guidance document advising the hunting and fishing guides that they did
not have to comply with FAA regulations governing commercial pilots. 132
The court, citing Paralyzed Veterans, held that “[w]hen an agency has given
its regulation a definitive interpretation, and later significantly revises that
interpretation, the agency has in effect amended its rule, something it may not
accomplish without notice and comment.”133
B. Perez v. Mortgage Bankers Association
In 2015, the Paralyzed Veterans doctrine was officially overturned.
In Perez v. Mortgage Bankers Association, a dispute arose over whether
mortgage-loan officers were covered under the Fair Labor Standards Act of
1938 (“FLSA”).134 The FLSA sets baseline requirements for overtime
Id. at 581.
Id. at 582.
126
Id.
127
Id. at 588 (“[T]he manual interpretation is not sufficiently distinct or additive to the regulation to
require notice and comment.”).
128
See id. at 586–87.
129
Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1201 (2015).
130
177 F.3d 1030, 1033–34 (D.C. Cir. 1999).
131
Id. at 1030.
132
Id. at 1031.
133
Id. at 1034 (emphasis added).
134
135 S. Ct. at 1204.
124
125
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compensation for certain subsets of employees.135 Individuals “employed in
a bona fide executive, administrative, or professional capacity . . . or in the
capacity of outside salesman” do not receive these protections.136 The
Secretary of Labor has the authority to “‘define’ and ‘delimit’ the categories
of exempt administrative employees.”137 In 1999 and 2001, the Department
of Labor (“DOL”) issued letters (interpretive rules) finding that mortgageloan officers were entitled to FLSA protections.138 In 2006, the DOL issued
a new letter amending its interpretation to find that mortgage-loan officers
were among the employees exempted from FLSA protections.139 In 2010, the
DOL yet again amended its interpretation of the FLSA.140 It issued an opinion
letter stating that, because “mortgage-loan officers ‘have a primary duty of
making sales for their employers,’” they do not qualify for the “administrative
exemption” and are in fact entitled to FLSA protections.141
As a result of the inconsistent interpretations, the Mortgage Bankers
Association (“MBA”) filed a complaint, arguing that the amendments to the
interpretation were required to follow notice-and-comment rulemaking under
Paralyzed Veterans and Alaska Hunters.142 The district court ruled in favor
of the DOL on a motion for summary judgment because MBA did not prove
that it had relied on the 2006 interpretation.143 In 2013, the D.C. Circuit
reversed the district court, finding that the Paralyzed Veterans doctrine did in
fact require the DOL to follow notice-and-comment proceedings before
amending its interpretation of the FLSA.144
On March 9, 2015, the Supreme Court took steps to contract the scope
of informal rulemaking back to what was originally envisioned during the
APA’s enactment.145 The Court struck down the Paralyzed Veterans
doctrine, finding that it “is contrary to the clear text of the APA’s rulemaking
provisions, and it improperly imposes on agencies an obligation beyond the
[APA’s] ‘maximum procedural requirements’ . . . .”146 The Court went on to
state that “[this] straightforward reading of the APA . . . harmonizes with
longstanding principles of [this Court’s] administrative law jurisprudence[,]
[which has consistently held] that the APA ‘sets forth the extent of judicial
authority to review executive agency action for procedural correctness.’”147
135
136
137
138
139
140
141
142
143
144
145
146
147
Id.
Id. (alterations in original) (quoting 29 U.S.C. § 213(a)(1) (2012)).
Id. (citation omitted).
Id.
Id. at 1205.
Id.
Id.
Id.
See generally Mortg. Bankers Ass’n v. Solis, 864 F. Supp. 2d 193, 210 (D.D.C. 2012).
See generally Mortg. Bankers Ass’n v. Harris, 720 F.3d 966, 972 (D.C. Cir. 2013).
See generally Perez, 135 S. Ct. at 1203.
Id. at 1206 (quoting Vt. Yankee Nuclear Power Corp. v. NRDC, Inc., 435 U.S. 519, 524 (1978)).
Id. at 1207 (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513 (2009)).
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Given a plain reading of the APA, the Court’s logic makes perfect
sense. The APA explicitly provides that notice-and-comment procedures
“do[] not apply . . . to interpretive rules, general statements of policy, or rules
of agency organization, procedure, or practice” unless another statute
indicates otherwise.148 Because the DOL’s original opinion letter was an
interpretive rule, it did not require notice-and-comment.149 It follows that an
amendment to the interpretive rule is still technically an agency’s
interpretation and, under the APA, does not require notice-and-comment.150
Justices Alito, Scalia, and Thomas all filed concurring opinions in
Perez.151 These justices took issue with the degree of judicial deference that
interpretive rules receive.152 Currently, the Court applies Auer deference to
an agency’s interpretation of its own regulations.153 The Court has described
Auer deference by stating: “We must give substantial deference to an
agency’s interpretation of its own regulations. Our task is not to decide which
among several competing interpretations best serves the regulatory purpose.
Rather, the agency’s interpretation must be given ‘controlling weight unless
it is plainly erroneous or inconsistent with the regulation.’”154 Justice Scalia
noted that, while improper for lower courts to impose additional procedures
beyond what the text of the APA requires, with the demise of the Paralyzed
Veterans doctrine and the extreme degree of deference given to agency
interpretations, “[a]gencies may now use [interpretive rules] not just to advise
the public, but also to bind them. After all, if an interpretive rule gets
deference, the people are bound to obey it on pain of sanction . . . . Interpretive
rules that command deference do have the force of law.”155 As a solution,
Justice Scalia suggests that courts abandon Auer, meaning that “[t]he agency
is free to interpret its own regulations with or without notice and comment;
but courts will decide—with no deference to the agency—whether that
interpretation is correct.”156
C. “Regulation by Blog Post”: The Inevitable (and Likely Immediate)
Effects of Perez
The world today is different than it was in 1946 when the APA was
5 U.S.C. § 553(b)(3)(A) (2012).
See id.
Perez, 135 S. Ct. at 1206.
151
Id. at 1210 (Alito, J., concurring); id. at 1211 (Scalia, J., concurring); id. at 1213 (Thomas, J.,
concurring).
152
Id. at 1210 (Alito, J., concurring); id. at 1211 (Scalia, J., concurring); id. at 1213 (Thomas, J.,
concurring).
153
Id. at 1212 (Scalia, J., concurring) (noting that an agency’s interpretation of its own regulation is
currently given Auer deference).
154
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (internal citations omitted) (emphasis
added).
155
Perez, 135. S. Ct. at 1212 (Scalia, J., concurring).
156
Id. at 1213 (emphasis added).
148
149
150
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enacted. Today, every federal agency has its own website.157 Several
agencies dedicate specific sections of their websites to support rulemaking
initiatives.158 The Environmental Protection Agency (“EPA”) serves as
“managing partner” for the federal government’s “eRulemaking Initiative,”
which is designed to “enable the public ease of access to participate in a high
quality, efficient, and open rulemaking process.”159 In the past, in order for
members of the public to participate in or observe the notice-and-comment
process, they would have to “know the sponsoring agency, when [the
regulation] would be published, review it in a reading room, and then
[struggle through] the comment process specific to each agency.”160 Today,
with the press of a button, the public has access to every single agency
regulation.161 One can even sign up to receive e-mail alerts immediately after
an agency has drafted or amended a specific regulation.162 Agencies are also
using social media to interact with the public.163 A 2011 study conducted by
Professor Cary Coglianese found that 31 agency websites contained a link to
an agency blog, 32 agency websites provided a subscription service for
immediate e-mail updates, 39 agency websites contained a link to Facebook,
and 43 agency websites contained a link to an agency Twitter account.164
While the study suggests that agencies should provide more information about
rulemaking in their social media efforts, the potential to do so is just a click
away.165
The public is taking advantage of these resources. The United
Nations conducts a biennial survey that assesses the e-Government
development status of the 193 United Nations Member States.166 In 2014, the
United States was one of 25 countries to receive a “very high” e-Government
Index score.167 The Survey notes that since 2012, the United States has
“customized its digital agenda to fit the new tendencies and needs of its
citizens, such as cloud computing, smart mobile devices, tablets and high
speed networks.”168 As a result, in 2014, United States citizens ranked ninth
157
Cary Coglianese, Enhancing Public Access to Online Rulemaking Information, 2 MICH. J. ENVTL.
& ADMIN. L. 1, 12 (2012).
158
Id.
159
About Us: The eRulemaking Program, REGULATIONS.GOV, http://www.regulations.gov/#!aboutPro
gram (last visited Mar. 9, 2016).
160
Id.
161
See supra note 159 and accompanying text.
162
See supra note 159 and accompanying text.
163
See infra note 164 and accompanying text.
164
Coglianese, supra note 157, at 30–31.
165
See id. (“[T]hose agencies that are using social media . . . do not yet use these more interactive, Web
2.0 tools much in connection with their rulemaking.”).
166
UNITED NATIONS, UNITED NATIONS E-GOVERNMENT SURVEY 2014: E-GOVERNMENT FOR THE
FUTURE WE WANT 1 (2014), https://publicadministration.un.org/egovkb/Portals/egovkb/Documents/un/2
014-Survey/E-Gov_Complete_Survey-2014.pdf.
167
Id. at 15.
168
Id. at 24.
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in the world for “e-Participation.”169
The recent Perez decision, the increasing agency use of electronic
media, and the increasing public consumption of that electronic media, all
allow for the result that occurred in Texas Children’s Hospital v. Burwell,170
which Professor Josh Blackman has referred to as “regulation by blog
post.”171 In this case, Texas Children’s Hospital brought suit against the
United States Department of Health and Human Services (“HHS”) and the
Center for Medicare and Medicaid Services (“CMS”).172 The case revolves
around CMS’s interpretation of the Medicaid Act.173 In an effort to encourage
hospitals to provide services to Medicaid-eligible patients, Congress provides
hospitals with financial assistance.174
Those hospitals serving a
disproportionate share of Medicaid-eligible patients (called “DSHs”) receive
“payment adjustments . . . .”175 In 2003, the Medicaid statute was amended to
require each state to provide an annual report and audit of its DSH program.176
In 2008, CMS issued a Final Rule that defined the types of costs and payments
that must be disclosed in the audit reports.177
In 2011 and 2012, Texas Children’s Hospital—a DSH—found that
its federal assistance limit was calculated significantly lower than it
expected.178 Years later, the Hospital discovered the cause—a “frequently
asked questions” (“FAQs”) section on CMS’s website.179 As many agencies
now do, in 2010, CMS provided the public with answers to FAQs about the
audit requirements on its website.180 One response to a question stated:
“[D]ays, costs, and revenues associated with patients that are eligible for
Medicaid and also have private insurance should be included in the
calculation of the hospital-specific DSH limit.”181 Notably, the Texas Health
and Human Services Commission—the Commission responsible for
calculating DSH limits in Texas—believed it was bound by the FAQs portion
of the CMS website.182 Texas, understandably, had taken the advice of CMS
Id. at 64–65.
76 F. Supp. 3d 224, 247 (D.D.C. 2014) (order granting preliminary injunction).
171
Josh Blackman, Regulation by Blog Post: DDC Enjoins HHS from Implementing Website FAQ,
JOSH BLACKMAN’S BLOG (Dec. 31, 2014), http://joshblackman.com/blog/2014/12/31/regulation-by-blogpost-ddc-enjoins-hhs-from-implementing-website-faq/?utm_source=dlvr.it&utm_medium=twitter
(stating that “[o]ne of the hallmarks of Obamacare has been the sudden, ad hoc modifications of the law,
outside the notice and comment process, through a series of executive memorandum, blog posts, and even
oh-so-helpful FAQs”).
172
Tex. Children’s Hosp., 76 F. Supp. 3d at 228.
173
Id. (discussing 42 U.S.C. § 1396 (2012)).
174
Id. (discussing 42 U.S.C. § 1396b(a)(1)).
175
Id. at 230 (discussing 42 U.S.C. § 1396r–4(c)).
176
42 U.S.C. § 1396r–4(j) (2012).
177
See Medicaid Program; Disproportionate Share Hospital Payments, 73 Fed. Reg. 77,904 (Dec. 19,
2008) (to be codified at 42 C.F.R. pts. 447, 455).
178
Tex. Children’s Hosp., 76 F. Supp. 3d at 232–33.
179
Id. at 232.
180
Id. at 231.
181
Id. (emphasis omitted) (citation omitted).
182
Id. at 233.
169
170
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and effectively incorporated the methodology suggested by the FAQ.183
Only one problem existed with Texas following the advice set forth
in the FAQ––the advice was arguably incorrect. The 2008 Final Rule made
“no mention of payments from private insurance for Medicaid-eligible
patients.”184 The FAQ post, on the other hand, definitively states that private
insurance should be included in the calculation of the DSH limit.185 As
previously mentioned, the distinction between a legislative and nonlegislative
rule is “one of the most confusing [issues] in administrative law.”186 Here, the
district court construed the FAQ post as a legislative rule, stating:
Because [the FAQ advice] makes a substantive change to the
formula for calculating a hospital’s DSH limit, binds state
Medicaid agencies, and effectively amends the 2008 Rule, it
likely constitutes a final agency action . . . and may only be
promulgated in accordance with the notice-and-comment
provisions of 5 U.S.C. § 553.187
Just as easily, however, the court could have found that the FAQ post was an
interpretive rule. The Final Rule in 2008 was silent as to whether private
insurance should be included in the calculation of the DSH limit, so the FAQ
was arguably the result of CMS’s interpretation.
Regardless of the court’s classification, it is not disputed that
interpretive rules often have binding effect.188 After Perez, agencies may
make substantive changes to interpretive rules that, for all intents and
purposes are binding, with only the click of a button. Those affected by the
agency’s change in stance have the difficult burden of showing that the
“agency’s interpretation . . . ‘is plainly erroneous or inconsistent with the
regulation.’”189 The result, as put by Professor Blackman, could lead to “ad
hoc modifications of the law, outside the notice and comment process,
through a series of executive memorandum, blog posts, and even oh-sohelpful FAQs.”190
183
Id. (citation omitted) (“Texas continued to operate under a state Medicaid plan that it viewed as
incorporating FAQ 33’s calculation.”).
184
Id. at 237 (citation omitted).
185
Id. at 231.
186
Gersen, supra note 27, at 1705; see also Franklin, supra note 11, at 278 (“There is perhaps no more
vexing conundrum in the field of administrative law than the problem of defining a workable distinction
between legislative and nonlegislative rules.”); Saunders, supra note 27, at 348 (“While [legislative and
interpretive rules] are generally recognized, there is not general accord on how they should be defined.”).
187
Tex. Children’s Hosp., 76 F. Supp. 3d at 241.
188
Gersen, supra note 27, at 1711 (“Virtually all agree that policy statements . . . do not bind the agency
or the public. But at least one pocket of scholarship suggests that while policy statements are not binding,
valid interpretive rules are binding to the extent that they ‘merely interpret’ already existing legal duties.”).
189
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (quoting Bowles v. Seminole Rock &
Sand Co., 325 U.S. 410, 414 (1945)).
190
Blackman, supra note 171 (criticizing the implementation of Obamacare).
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D. Past Solutions to a Current Problem
Given the current system today, agencies are left with a choice: they
can follow the highly ossified, time-and-resource-intensive informal
rulemaking process that is technically binding on the public; or they can
quickly draft a nonlegislative rule, distribute this rule to the public in seconds
via the agency’s website, and know that the nonlegislative rule is, in practice,
binding.191 While more pressing today due to the speed at which agencies can
issue nonlegislative rules to a broader audience, prior to the implementation
of the Paralyzed Veterans doctrine, scholars were faced with the same
problem that exists today: agencies bypassing the notice-and-comment
process and promulgating interpretive rules with binding effect.192 As such,
commentators, noting this disparity, have examined the potential impacts of
both deossifying the notice-and-comment process and of ossifying the
nonlegislative rulemaking process.193
Professor Robert A. Anthony suggests that even when an exception
to the notice-and-comment process applies, agencies should still follow
formalized procedures “whenever it is feasible and appropriate to do so.” 194
For tentative policy statements, he advises that agencies “should forthrightly
declare in their nonlegislative policy documents that the stated policies are
tentative,” and ensures that agency staff and those affected by agency
regulations are made aware that the policies “are tentative and are subject to
challenge . . . before they are [finally] applied.”195 Further, he recommends
that full notice-and-comment procedures be used when agencies make
interpretations that: “1) extend the scope of the jurisdiction the agency in fact
exercises; 2) alter the obligations or liabilities of private parties; or 3) modify
the terms on which the agency will grant entitlements.”196
The late Charles H. Koch, Jr. went further, arguing “the public should
have some opportunity for participating in the formulation and promulgation
of interpretative rules and general statements of policy.”197 Koch provided
two possible solutions.198 First, Congress could do away with the portion of
the APA that exempts interpretive rules and general statements of policy from
the notice-and-comment process, instead providing for “good cause
exemptions . . . .”199 Better yet, he recommends “the evolution of procedures
specially tailored to the individual forms of exempt rulemaking through
See discussion supra Part II.
See infra notes 193–208 and accompanying text.
193
See Pierce, Jr., supra note 55, at 60; see also Anthony, supra note 113, at 1315; Asimow, supra note
83, at 382.
194
Anthony, supra note 113, at 1373.
195
Id. at 1374.
196
Id. at 1377.
197
Charles H. Koch, Jr., Public Procedures for the Promulgation of Interpretative Rules and General
Statements of Policy, 64 GEO. L.J. 1047, 1078 (1976) (emphasis added).
198
See infra notes 199–200 and accompanying text.
199
Koch, Jr., supra note 197, at 1078.
191
192
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notions of fairness . . . .”200
Commentators have expressed concern, however, that ossifying the
implementation of nonlegislative rules will lead to the same result that
occurred after the ossification of informal rulemaking, which is less
process.201
Professor Asimow, acknowledging the “importance of
nonlegislative rules,” also asked whether full notice-and-comment procedures
should be required before promulgation.202 He concluded requiring an agency
to undergo full notice-and-comment procedures before promulgating a
nonlegislative rule “would be a significant disincentive to nonlegislative
rulemaking,” and therefore, the risk of less nonlegislative rules was not worth
the benefits that additional process would provide.203 As an alternative,
Asimow suggests that agencies should follow the Administrative Conference
of the United States’ recommendation that agencies partake in voluntary
notice-and-comment procedures for nonlegislative rules that are expected to
have a “substantial impact” on the public.204 For all other nonlegislative rules,
agencies should allow the public to submit comments after the rule is
implemented.205
Professor Kevin W. Saunders, focusing narrowly on interpretive rules
that have legislative effect, expressed similar concerns to Professor Asimow,
yet suggests a different proposal intended to allow for public participation in
the notice-and-comment process and prevent agencies from implementing
binding rules without following APA requirements.206 Saunders leaves the
choice up to the agency, recommending that the agency be required to state
whether the rule will have legislative effect before it is issued.207 Rules that
the agency desires to have legislative effect must follow the APA
requirements, and rules that the agency does not wish to have legislative effect
Id.
See infra notes 202–05 and accompanying text.
Asimow, supra note 83, at 409.
203
Id. at 409, 426 (“Mandatory pre-adoption procedure would be a significant disincentive to
nonlegislative rulemaking. The public would lose more than it would gain. . . . [Moreover,] [e]ven if a
nonlegislative rule lacks substantial impact on the lives or fortunes of those affected by it, the rule would
in many cases benefit from the input of interested members of the public. Yet to open all nonlegislative
rules to advance public participation would have a devastatingly negative effect on the administrative
process.”).
204
Id. at 421.
205
Id. Asimow suggests that this “post-adoption procedure” has five advantages. Id. at 421–22. “First,
it would not delay the effective date of a [nonlegislative] rule” that is “trivial or clearly valid . . . .” Id. at
421. “Second, a requirement of post-adoption procedure would in practice lead agencies to provide preadoption procedures for important rules that are expected to provoke substantial comment.” Id. at 422.
Third, the public would be able to make more informed comments after the rule is implemented than it
would be able to in a pre-adoption notice-and-comment process. Id. “Fourth, a record consisting of public
comments and agency responses would be invaluable to a court engaged in pre-enforcement judicial review
of the validity of a nonlegislative rule.” Id. Lastly, Asimow suggests that post-adoption procedures would
result in greater public participation. Id.
206
Saunders, supra note 27, at 373.
207
Id.
200
201
202
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are exempted from notice-and-comment proceedings.208
IV. THE PROBLEMS WITH THE CURRENT DEFERENCE GIVEN TO
NONLEGISLATIVE RULES
While circuit courts improperly attempted to take matters into their
own hands and require more process from agencies before amending
interpretive rules, after Perez, agencies can rest easy knowing that as long as
the rule is classified as “interpretive” they do not have to follow notice-andcomment procedures.209 This is problematic for two main reasons. First, as
previously stated, these “interpretive” rules are often indistinguishable from
legislative rules and have binding effect.210 Perhaps more important is the
high degree of deference that courts currently give agencies when interpreting
their own regulations.211 As noted by Justice Scalia in Perez, a primary reason
that agencies are able to issue binding rules without following APA
procedures is the great deal of judicial deference agency interpretations
receive.212 Parties affected by agency interpretations of their own regulations
have no incentive to bring forth litigation challenging the agency when they
know the agency’s interpretation is likely to be upheld.213
A. Standard of Review Given to Agency Interpretations of Statutes
Until 2001, an agency’s interpretation of a congressional statute—
different from an agency’s interpretation of its own regulation—was often
afforded Chevron deference (referred to as the “Chevron Two-Step test”), a
form of deference that a 1998 study found upholds agency interpretations an
astounding 89% of the time if the issue reaches the “second step.”214 The first
part of the Chevron Two-Step test requires courts to enforce congressional
intent if “Congress has directly spoken to the precise question at issue.”215 If
Congress has not spoken to the precise question at issue, however, then courts
must still defer to the agency’s interpretation of the statute as long as that
interpretation is reasonable.216
In United States v. Mead Corp., however, the Court introduced a new
inquiry (referred to as the “Chevron Step Zero”) to determine when agencies
Id.
135 S. Ct. 1199, 1212 (2015) (Scalia, J., concurring) (“By deferring to interpretive rules, we have
allowed agencies to make binding rules unhampered by notice-and-comment procedures.”).
210
Id.
211
See infra note 212 and accompanying text.
212
135 S. Ct. at 1211–12 (Scalia, J., concurring).
213
Webb Yackee & Webb Yackee, supra note 67, at 1432.
214
Orin S. Kerr, Shedding Light on Chevron: An Empirical Study of the Chevron Doctrine in the U.S.
Courts of Appeals, 15 YALE J. ON REG. 1, 31 (1998).
215
467 U.S. 837, 842 (1984).
216
Id. at 843.
208
209
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are entitled to Chevron deference.217 In Mead, the Court stated that Chevron
deference applies when “Congress would expect the agency to be able to
speak with the force of law when it addresses ambiguity in the statute or fills
a space in the enacted law . . . .”218 When Congress has expressly delegated
to the agency informal rulemaking or formal adjudication powers, the Court
assumes that Congress expects the agency to speak with the force of law and
gives the agency’s interpretation Chevron deference.219 An agency’s
interpretation may still receive Chevron deference even if it has not been
delegated informal rulemaking or formal adjudication powers, depending on
whether the agency’s interpretation was binding and the amount of formality
that the agency used when arriving at its interpretation.220
In Mead, the Court held that if an agency’s interpretation of a statute
is not entitled to Chevron deference, it might still be entitled to Skidmore
deference.221 Skidmore deference, derived from Skidmore v. Swift & Co.,
gives a varying amount of weight to an agency’s interpretation depending on
“the thoroughness evident in its consideration, the validity of its reasoning,
its consistency with earlier and later pronouncements, and all those factors
which give it power to persuade, if lacking power to control.”222 Whereas
under Chevron deference, the Court leaves the agency’s interpretation in
place so long as it is reasonable, under Skidmore, the Court, after giving the
agency deference, determines what it thinks is the best interpretation.223
One year later, in Barnhart v. Walton, the Court again examined
whether an agency interpretation was entitled to Chevron deference.224 In
Barnhart, the Court examined whether the Social Security Administration’s
interpretation of the Social Security Act was entitled to Chevron deference.225
Looking to “the interstitial nature of the legal question, the related expertise
of the Agency, the importance of the question to administration of the statute,
the complexity of that administration, and the careful consideration the
Agency has given the question over a long period of time,” the Court found
that the Social Security Administration’s interpretation was entitled to
Chevron deference.226 While lower courts have used both the Mead and
217
533 U.S. 218, 234 (2001); see also Cass R. Sunstein, Chevron Step Zero, 92 VA. L. REV. 187, 191
(2006).
218
Mead, 533 U.S. at 229.
219
Id. (noting that such a delegation is “a very good indicator of delegation meriting Chevron
treatment”).
220
Id. at 230–31, 231–34 (“[A]s significant as notice-and-comment is in pointing to Chevron authority,
the want of that procedure here does not decide the case, for we have sometimes found reasons for Chevron
deference even when no such administrative formality was required and none was afforded . . . .”).
221
Id. at 234–35 (“[T]here is room at least to raise a Skidmore claim here, where the regulatory scheme
is highly detailed, and [the agency] can bring the benefit of specialized experience to bear on the subtle
questions in this case . . . .”).
222
323 U.S. 134, 140 (1944).
223
Id.
224
See generally 535 U.S. 212 (2002).
225
Id. at 217–18.
226
Id. at 222.
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Barnhart factors to determine whether an agency’s statutory interpretation is
entitled to Chevron deference, the courts “generally understand that Chevron
deference applies only if Congress delegates, and the agency exercises,
authority to issue interpretations with the force of law.”227
B. Standard of Review Given to Agency Interpretations of Their Own
Regulations
Under what is known as Auer deference, an agency’s interpretation
of its own regulation is given “controlling weight unless it is plainly erroneous
or inconsistent with the regulation” regardless of the process the agency uses
in formulating its interpretation.228 Auer deference is analogous to Chevron
deference,229 and its application to an agency’s interpretation of its own
regulation has the same benefits that providing Chevron deference to an
agency’s interpretation of a statute has.230 First, agencies are designed to be
experts in their assigned field, whereas judges are widely regarded as
generalists.231 Therefore, when a matter falls within the agency’s expertise,
the agency is in a better position to make a decision.232 Second, while courts
are bound by precedent, agencies have more flexibility when making
decisions.233 This flexibility “promotes efficiency, avoiding the need for
227
Lisa Schultz Bressman, How Mead has Muddled Judicial Review of Agency Action, 58 VAND. L.
REV. 1443, 1457 (2005).
228
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (quoting Bowles v. Seminole Rock &
Sand Co., 325 U.S. 410, 414 (1945)). Auer deference is derived from Bowles. 325 U.S. 410. In a more
recent case, Gonzales v. Oregon, the Court noted a distinction between when Auer and Mead apply,
reaffirming that Auer does not apply to an agency’s interpretation of statutes. 546 U.S. 243, 255–58 (2006).
The Court stated:
[T]he existence of a parroting regulation does not change the fact that the question
here is not the meaning of the regulation but the meaning of the statute. An agency
does not acquire special authority to interpret its own words when, instead of using
its expertise and experience to formulate a regulation, it has elected merely to
paraphrase the statutory language.
Id. at 257.
229
Decker v. Nw. Envtl. Def. Ctr., 133 S. Ct. 1326, 1339 (2013) (Scalia, J., concurring in part and
dissenting in part) (citation omitted) (“In practice, Auer deference is Chevron deference applied to
regulations rather than statutes.”).
230
See Matthew C. Stephenson & Miri Pogoriler, Seminole Rock’s Domain, 79 GEO. WASH. L. REV.
1449, 1459–61 (2011).
231
Chad M. Oldfather, Judging, Expertise, and the Rule of Law, 89 WASH. U. L. REV. 847, 848
(2012) (“[T]he iconic American judge remains a generalist. She sits on a court of general jurisdiction and
adjudicates whatever disputes happen to come before her.”); see also John F. Manning, Constitutional
Structure and Judicial Deference to Agency Interpretations of Agency Rules, 96 COLUM. L. REV. 612, 680–
81 (1996) (stating that federal courts should provide greater deference to agencies given their expertise and
experience).
232
Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 866 (1984) (“When a challenge . . . really
centers on the wisdom of the agency’s policy, rather than whether it is a reasonable choice within a gap
left open by Congress, the challenge must fail.”); see also Pierce, Jr., supra note 55, at 95 (“It is simply too
easy for judges to say they are applying such a standard while they continue instead to evidence the
seemingly unlimited hubris that has long been apparent in many judicial decisions reviewing complicated
regulatory rules that raise issues beyond the understanding of most judges.”).
233
See Jonathan Masur, Judicial Deference and the Credibility of Agency Commitments, 60 VAND.
L. REV. 1021, 1025 (2007) (noting the “Supreme Court’s trend . . . towards providing agencies with ever
greater temporal flexibility”). For an argument that agency flexibility has been diminished by the recent
case of Alaska Prof’l Hunters Ass’n v. Fed. Aviation Admin., see Downer, supra note 63, at 891–92.
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lengthy litigation to resolve every regulatory ambiguity.”234 Third, while
Supreme Court justices and many other judges across the country have life
terms, agency heads are politically accountable to the electorate by way of the
Executive Branch.235 Going further, Auer deference arguably provides
greater benefits than Chevron deference. An agency that drafts a regulation
should be in the best position to determine what its own regulation intends.236
Moreover, “by giving primacy to agencies’ interpretations rather than those
of reviewing courts, Auer deference tends to promote certainty and
predictability in the administration of regulations. This also tends to promote
uniformity of application in different judicial circuits.”237
Despite these benefits, there are also several reasons why three
justices in Perez and numerous academic commentators have been critical of
Auer deference as of late.238 In 2011, Justice Scalia noted that “[i]t seems
contrary to fundamental principles of separation of powers to permit the
person who promulgates a law to interpret it as well.”239 Further, the fact that
Auer allows for a high degree of deference to agency interpretations of their
own regulations becomes problematic depending on the amount of thought
that goes into those original interpretations. Over the years, courts have
provided Auer deference to highly informal agency interpretations, raising the
question of whether the agency’s expertise is actually being utilized.240 For
instance, courts have given Auer deference to agency interpretations set forth
for the first time in amicus briefs.241 While amicus briefs “lack the
transparency and public participation of rulemaking,” agencies have engaged
in “the affirmative use of amicus briefs . . . in strategic and at times aggressive
ways . . . to advance the President’s political agenda in the courts.”242 This
concern is amplified by the fact that when courts decide Auer deference
234
Clean Water Act - Auer Deference - Decker v. Northwest Environmental Defense Center, 127
HARV. L. REV. 328, 333 (2013).
235
Bradley Lipton, Note, Accountability, Deference, and the Skidmore Doctrine, 119 YALE L.J.
2096, 2099 (2010) (“[A]gencies are more politically accountable than courts.”).
236
DAVIS, supra note 34, at 352.
237
Ben Snowden, Has Auer’s Hour Arrived?, 28 NAT. RES. & ENV’T 31, 31 (2014) (first citing Talk
Am., Inc. v. Mich. Bell Tel. Co., 131 S. Ct. 2254, 2266 (2011) (Scalia, J., concurring); and then citing
Couer Alaska, Inc. v. Se. Alaska Conservation Council, 557 U.S. 261, 296 (2009) (Scalia, J., concurring)).
238
See Kevin O. Leske, Between Seminole Rock and a Hard Place: A New Approach to Agency
Deference, 46 CONN. L. REV. 227, 230 (2013); see also Manning, supra note 231, at 613–14; Kevin M.
Stack, Interpreting Regulations, 111 MICH. L. REV. 355, 371–75 (2012); Derek A. Woodman, Rethinking
Auer Deference: Agency Regulations and Due Process Notice, 82 GEO. WASH. L. REV. 1721, 1723–25
(2014).
239
Talk Am., 131 S. Ct. at 2266 (Scalia, J., concurring).
240
See Deborah Thompson Eisenberg, Regulation by Amicus: The Department of Labor’s Policy
Making in the Courts, 65 FLA. L. REV. 1223, 1226 (2013).
241
Id. (“Since Chevron, deference doctrine has reached far beyond rulemaking to include informal
agency interpretations and amicus arguments.”); Auer v. Robbins, 519 U.S. 452, 462 (1997) (“[T]hat the
Secretary’s interpretation comes to us in the form of a legal brief . . . does not, in the circumstances of this
case, make it unworthy of deference.”); Chase Bank USA, N.A. v. McCoy, 562 U.S. 195, 196 (2011)
(quoting Auer, 519 U.S. at 461) (“This Court defers to an agency’s interpretation of its own regulation,
advanced in a legal brief, unless that interpretation is ‘plainly erroneous or inconsistent with the
regulation.’”).
242
Eisenberg, supra note 240, at 1226–27.
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applies, they often rule in favor of the agency without engaging in a thorough
review of the agency’s interpretation.243 For example, of the twenty cases that
district courts applied Auer deference to in 2008, the rationality of the
agency’s interpretation was only discussed eleven times.244 In 2009, of the
nineteen cases that applied Auer deference, there was “no discussion of the
standards or application seven-out-of-nineteen times. In the remaining twelve
cases, only eight courts gave more than a superficial review of the standard
or application of the facts to the doctrine.”245 Given these numbers, regardless
of the amount of the time an agency spends developing its interpretation, and
despite the lack of formality used in coming to its interpretation, courts will
uphold an agency’s interpretation of Auer deference without meaningful
review about 50% of the time.246
V. SOLUTION
In summary, we are left with a mess. Courts and scholars struggle to
make a clear distinction between legislative and nonlegislative rules. But
when issuing rules after Perez, agencies know that so long as the court
determines the rule is nonlegislative, the agency is exempt from using noticeand-comment procedures.247 Consequently, agencies are likely to continue
using nonlegislative rules improperly and in a manner that has binding effect.
Those affected by nonlegislative rules may not realize the agency is acting
improperly and have little incentive to bring a challenge. But if a challenge
is brought against the agency, it is highly unlikely that an agency’s
interpretation of its own regulation will be overturned given the extremely
lenient standard of review—Auer deference—that is applied.248
After Perez and Vermont Yankee, it is clear that lower courts cannot
impose additional procedural requirements on agencies beyond what the APA
mandates.249 It is also highly unlikely that Congress will take steps to amend
the APA and impose additional requirements on agencies issuing interpretive
rules with binding effect, although doing so would be the best possible
solution.250 Rather than exempt interpretive rules from the notice-and243
See Claire R. Kelly, The Brand X Liberation: Doing Away with Chevron’s Second Step as Well as
Other Doctrines of Deference, 44 U.C. DAVIS L. REV. 151, 204 (2010).
244
Id.
245
Id. at 205–06.
246
See supra notes 244–45 and accompanying text.
247
See supra note 208 and accompanying text.
248
Keim, supra note 9.
249
135 S. Ct. 1199, 1207 (2015) (quoting 435 U.S. 519, 549 (1978)) (“Beyond the APA’s minimum
requirements, courts lack authority ‘to impose upon [an] agency its own notion of which procedures are
“best” or most likely to further some vague, undefined public good.’”).
250
Rachel Weiner & Ed O’Keefe, Judging the (Un)productivity of the 113th Congress, WASH. POST
(Aug. 2, 2013), http://www.washingtonpost.com/blogs/the-fix/wp/2013/08/02/judging-the-unproductivity
-of-the-113th-congress/ (describing the 112th Congress as the “most unproductive” Congress ever); see
also Connor Raso, Agency Avoidance of Rulemaking Procedures, 67 ADMIN. L. REV. 65, 121–22 (2015)
(“Writing a comprehensive and prescriptive statutory definition of when agencies may permissibly avoid
a rulemaking procedure requirement is difficult.”).
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comment process, Congress could impose only one requirement on agencies
promulgating interpretive rules: the requirement that agencies “disclose in
detail the thinking that has animated the form of a proposed [interpretive] rule
and the data upon which that is based,” and still apply Auer deference if the
agency does so.251 This would ensure that agencies—who are in a better
position than courts to interpret regulations—are utilizing their expertise.
With more detail provided by the agency, it would also make it harder for
courts to ignore the rationale given when determining whether the agency’s
interpretation is “plainly erroneous or inconsistent with the regulation.”252
Alternatively, the judicial branch could incentivize agencies to utilize
their expertise when promulgating interpretive rules by granting deference
based entirely on the process used while making its interpretation. This could
be effectuated by applying the Mead framework when reviewing an agency’s
interpretation of its own regulations. Doing so will still provide the agency
with Auer deference when it acts “with the force of law . . . .”253 When the
agency is not acting with the force of law, however, rather than receiving Auer
deference, under the Mead framework, the agency will be entitled to Skidmore
deference.254 Under Skidmore, the agency will be rewarded with more
deference based on the degree to which the agency utilizes its expertise when
drafting the regulation.255
A. Providing Auer Deference to Agencies Acting with the Force of Law
Applying the Mead framework to nonlegislative rules with binding
effect draws in part on Professor Saunders’s solution in that it provides the
agency with a choice.256 If the agency wishes to ensure a greater likelihood
that the regulation will have legislative effect, then the agency can decide to
follow notice-and-comment procedures when promulgating the regulation.
Under Mead, following the notice-and-comment procedure is the equivalent
of acting “with the force of law . . . . ”257 Consequently, when the notice-andcomment process is followed, courts should uphold the agency’s
interpretation unless that interpretation is “plainly erroneous or inconsistent
with the regulation.”258
Home Box Office, Inc. v. FCC, 567 F.2d 9, 35–36 (D.C. Cir. 1977).
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (quoting Bowles v. Seminole Rock &
Sand Co., 325 U.S. 410, 414 (1945)); see also supra note 221 and accompanying text.
253
United States v. Mead Corp., 533 U.S. 218, 229 (2001).
254
See supra note 221 and accompanying text.
255
See 323 U.S. 134, 140 (1944).
256
See supra notes 205–07 and accompanying text.
257
Mead, 533 U.S. at 229. Even without an explicit congressional grant to the agency to use noticeand-comment, under the Mead framework, courts should surely reward the agency’s regulation with
legislative effect due to the binding nature and formality inherent in the notice-and-comment process.
258
See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (quoting Bowles v. Seminole
Rock & Sand Co., 325 U.S. 410, 414 (1945)) (describing Auer deference). While this differs slightly from
Mead, which provides Chevron rather than Auer deference to agencies acting with the force of law, as
Justice Scalia has noted, “[i]n practice, Auer deference is Chevron deference applied to regulations rather
251
252
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When the notice-and-comment process is followed, courts can be
comforted by the fact that the agency’s expertise has been utilized.259 All of
the benefits associated with informal rulemaking are present, including
“bureaucratic accountability, . . . regulatory rationality,”260 “fairness,
allocative efficiency, and factual accuracy . . . .”261 But when there is no
indication that the agency has used its expertise, there is no benefit to
providing the agency with deference. Therefore, in cases such as Perez and
Texas Children’s Hospital, when the agency does not follow notice-andcomment procedures, it will not receive Auer deference. Following the Mead
framework and recognizing that requiring agencies to follow notice-andcomment procedures in all cases has its drawbacks, when the agency does not
follow notice-and-comment procedures, the agency will still receive
Skidmore deference.262
B. Providing Skidmore Deference to Agencies Acting Without the Force of
Law
If an agency opts to use less formal procedures when promulgating
interpretive rules, under Skidmore deference, courts should give varying
degrees of deference to the agency depending on how the agency came to its
interpretation.263 The factors that the court will look to are “the thoroughness
evident in [the agency’s] consideration, the validity of its reasoning, its
consistency with earlier and later pronouncements, and all those factors which
give it power to persuade, if lacking power to control.”264 In order to reward
and incentivize those agencies demonstrating that they have utilized their
expertise, courts should give the most weight to thoroughness evident in
agency’s consideration.
1. Thoroughness
Under the first factor—the thoroughness evident in the agency’s
consideration—courts should give weight to “the agency’s explanation of its
interpretation.”265 In Perez, the DOL provided some reasoning for its
than statutes.” See Decker v. Nw. Envtl. Def. Ctr., 133 S. Ct. 1326, 1339–40 (2013) (Scalia, J., concurring
in part and dissenting in part); see also Mead, 533 U.S. at 229.
259
See supra notes 231–37 and accompanying text.
260
See Webb Yackee & Webb Yackee, supra note 67, at 1419–20.
261
McGarity, supra note 68, at 1392.
262
See 533 U.S. at 220 (“[T]here is room at least to raise a Skidmore claim here, where the regulatory
scheme is highly detailed, and [the agency] can bring the benefit of specialized experience to bear on this
case’s questions.”). Professor Michael P. Healy argues that courts should completely do away with Auer
deference, instead reviewing agency interpretations under a two-step framework, applying Skidmore
deference at step two. Healy, supra note 23, at 677.
263
Kristin E. Hickman & Matthew D. Krueger, In Search of the Modern Skidmore Standard, 107
COLUM. L. REV. 1235, 1281 (2007).
264
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
265
Hickman & Krueger, supra note 263, at 1281.
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changing interpretations.266 For instance, in 2010, the DOL stated that
because “mortgage-loan officers ‘have a primary duty of making sales for
their employers, . . . [they] therefore do not qualify’ for the administrative
exemption.”267 The DOL further stated that its 2006 interpretation relied on
“misleading assumption[s] and selective and narrow analysis” of the original
rule.268 Providing an explanation for its interpretation is an indication that the
agency used its expertise to some degree in forming its conclusion. As noted
by Professors Kristin E. Hickman and Matthew D. Krueger, courts also look
to the formality of an agency’s proceedings under this factor.269 For instance,
the Second Circuit Court of Appeals has stated that “[t]horoughness is
impossible for an agency staff member to demonstrate when the staff member
does not report to the Secretary, bears no lawmaking authority, and is
unconstrained by political accountability. Thorough consideration requires a
macro perspective that a staff member, acting alone, lacks.”270 This factor
may also encourage agency heads to issue regulations rather than to delegate
authority.271 If an agency knows that it will be rewarded for its explanation
with more deference, it will be less likely to post an interpretive rule with no
explanation on a blog or website, and Professor Blackman’s concern of
“regulation by blog post” should be less pronounced.272
2. Validity of the Agency’s Reasoning
When evaluating the second factor—the validity of the agency’s
reasoning—courts must be sure to continue to take the other three factors into
consideration.273 A 2007 study found that in 15% of cases applying Skidmore,
courts relied too heavily on this factor and did not consider the other three
factors.274 Under this factor, “most courts consider the substantive merits of
the agency’s interpretation in determining whether to defer to it . . . .”275 But
relying too heavily on this factor becomes problematic, as often times, courts
are in a worse position to determine the validity of the reasoning than the
agencies.276 In Perez, while the DOL provided an explanation for its changing
See infra note 267 and accompanying text.
Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1205 (2015) (citation omitted).
268
Id.
269
Hickman & Krueger, supra note 263, at 1281–82.
270
Id. at 1282 (quoting De La Mota v. U.S. Dep’t of Educ., 412 F.3d 71, 80 (2d Cir. 2005)).
271
See United States v. Mead Corp., 533 U.S. 218, 219–20 (2001). In Mead, the Court found the fact
that the agency was issuing opinion letters “at a rate of 10,000 a year at 46 offices” to show that the agency
was not expecting to create binding law. Id.
272
See supra note 170 and accompanying text.
273
See infra notes 274–78 and accompanying text.
274
Hickman & Krueger, supra note 263, at 1273 (“To the extent that a court accepts an agency’s
interpretation solely because it is ‘valid,’ the court potentially extends deference beyond what Mead
envisioned.”).
275
Id. at 1285.
276
Pierce, Jr., supra note 55, at 95 (“It is simply too easy for judges to say they are applying such a
standard while they continue instead to evidence the seemingly unlimited hubris that has long been
apparent in many judicial decisions reviewing complicated regulatory rules that raise issues beyond the
understanding of most judges.”).
266
267
2016]
AUER DEFERENCE
31
interpretation, the validity of the reasoning appears suspect. In 2010, the DOL
stated that mortgage-loan officers do not qualify for the administrative
exemption because they “have a primary duty of making sales for their
employers . . . .”277 The DOL failed to state what changed, however.278 A
strong argument could be made if, for example, the role of a mortgage-loan
officer has evolved from ministerial to sales-based, but given that the DOL
makes no such argument, this factor weighs against providing a great deal of
deference.
3. Consistency
While Professors Hickman and Krueger state that this factor is “less
dispositive than other Skidmore factors[,] . . . [g]enerally, courts value
consistency because it protects parties’ reliance interests, promotes the rule of
law by ensuring similarly situated parties are treated similarly, and guards
against capricious or ill-intentioned agency action.”279 In 2005, the Tenth
Circuit Court of Appeals afforded an agency’s interpretation “little deference
principally because [it] had changed its interpretation of the statute three times
in thirty years, upsetting settled expectations of rights holders at each turn.”280
In Perez, the fact that the DOL has changed its interpretation three times since
1999 certainly weighs against providing deference. Mortgage banking
companies that relied on prior interpretations holding that mortgage-loan
officers were not entitled to FLSA protections are now on the hook for
unanticipated costs.
4. Other Factors with the Power to Persuade
Under Skidmore review, courts often take into account the agency’s
expertise.281 In Perez, the DOL is likely in a better position than the courts to
determine what a mortgage-loan officer’s primary job functions are. Still,
after fact-finding at the trial court level, this does not appear to be an issue of
such complexity that the judiciary requires the agency’s expertise. If the DOL
could affirmatively show that it exercised its expertise when formulating its
interpretation, this factor would weigh in favor of giving the DOL a greater
degree of deference.282
VI. CONCLUSION
For decades, agencies have been circumventing the notice-andcomment rulemaking process and issuing rules with binding effect under the
277
278
279
280
281
282
Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1205 (2015) (citation omitted).
Id.
Hickman & Krueger, supra note 263, at 1286–87.
Id. at 1287.
Id. at 1288–90.
See id. at 1289.
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guise of nonlegislative rules.283 This improper use of nonlegislative rules
caused circuit courts to take matters into their own hands.284 Under the
Paralyzed Veterans doctrine, the D.C. Circuit Court of Appeals held that an
agency “must use the APA’s notice-and-comment procedures when it wishes
to issue a new interpretation of a regulation that deviates significantly from a
previously adopted interpretation.”285
These judge-made rules once
discouraged agencies from using nonlegislative rules improperly.286
On March 9, 2015, the Supreme Court struck down the Paralyzed
Veterans doctrine.287 While the Court’s ruling was a correct reading of the
APA, under the current framework, agencies are left with a choice: when
promulgating rules, they can follow the ossified notice-and-comment process,
which can take years, and be comforted by the fact that after those years have
passed the rule will be legally binding. Alternatively, with the press of a
button, agencies can post a “nonlegislative rule” to their websites that, for all
intents and purposes, has legislative effect, and will receive a great deal of
deference. As a solution, this Article argues that deference to agencies is
highly beneficial when agencies utilize their expertise and seek the best
methods to encourage agencies do so. This can be done in two ways. First,
Congress could amend the APA to require agencies to “disclose in detail the
thinking that has animated the form of a proposed [interpretive] rule and the
data upon which that is based” prior to issuing interpretive rules, and still
apply Auer deference if the agency does so.288 Second, under the Mead
framework, courts can continue to apply Auer deference if the agency acts
“with the force of law” and utilizes the notice-and-comment process.289 When
the agency is not following the notice-and-comment process, courts should
apply Skidmore deference, which will incentivize agencies to be thorough in
their interpretations by providing more deference depending on the time spent
and energy utilized.290
See discussion supra Section II.D.
See infra note 285 and accompanying text.
285
Perez v. Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1200 (2015).
286
See Ryan DeMotte, Note and Comment, Interpretive Rulemaking and the Alaska Hunters Doctrine:
A Necessary Limitation on Agency Discretion, 66 U. PITT. L. REV. 357, 361 (2004) (arguing that the
Paralyzed Veterans doctrine “preserves public participation in important policy decisions and protects the
legitimate reliance interests of regulated parties”).
287
Perez, 135 S. Ct. at 1201.
288
Home Box Office, Inc. v. FCC, 567 F.2d 9, 35–36 (D.C. Cir. 1977).
289
533 U.S. 218, 229 (2001).
290
Home Box Office, 567 F.3d at 35.
283
284